Blake Jones hastily called a meeting last month to discuss Namaste Solar's plunging sales of solar panels, its generous culture and uncertain future.
Jones figured everybody would want to have input. After all, the 50 employees are equal shareholders in the Boulder company and they earn the same salary under its egalitarian structure.
Soon after the brainstorming session, the group came up with some ideas: from freezing new hiring and holding off on new vehicle purchases down to changing the annual holiday party to a potluck.
"In general, we are adding extra caution," Jones, Namaste's chief executive officer, said.
"We have a Denver office whose lease is up early next year," he said. "We are not sure what to do. We were going to look for a bigger space, but now we don't know what size we can afford. We don't know how to change course."
Most of Colorado's 200 or so solar companies are in the same boat as Namaste: They are trying to figure out how to change course in a rapidly deteriorating economy.
After two years of unprecedented growth – 50 percent or more – sales of residential solar systems have nose-dived 75 percent in the past three months as customers canceled or postponed their plans in the face of this economic downturn.
Compounding the unfortunate turn of events is Xcel Energy's sudden scaling back of solar rebates.
Some expect the industry to turn around in 2009, spurred by declining costs and increasing government support. For now, though, customers are biding their time.
"We have a number of customers sitting on the fence, not making a decision," said Jim Welch, chief executive of Bella Energy and president of the Colorado Solar Energy Industries Association.
Boulder County resident Therese Glowacki, for one, is unsure whether she ought to install solar panels on her 3,200- square-foot home now or wait and watch how events unfold in the coming months.
Voters in November passed a ballot measure allowing the county to offer loans to homeowners who want to install solar panels. The loan could be repaid with property taxes over time.
Glowacki is debating whether she should apply for the loan or refinance her house to raise the $6,300 she'd need to pay for the $25,000 system. The rest would be covered by rebates and credits.
"We want to have it," she said, "but we haven't signed on the dotted line."
Some companies trace the beginning of their woes to Xcel, which in late October decided to reduce its "renewable energy credit" – a subsidy it gives customers to help recover nearly half their solar installation costs.
Today, the credit is $1.50 per watt, compared with $2.50 per watt in the past year.
"I don't mean to demonize Xcel, but they couldn't have chosen a worse time to do this," said Jeff Scott, who runs SolSource, a Denver solar company. "With the economy going down, their decision wasn't supportive for the industry."
SolSource's residential sales have dropped to about five installations per month, compared with 20 a month earlier this year.
Xcel maintains it is a wash for customers, who still will be able to recover half the cost of installations through other rebates and federal tax credits.
Xcel spokesman Joe Fuentes said recently that the purpose of the renewable energy credits was to "kick-start" the solar industry in Colorado. Under state law, Xcel needs to get 20 percent of its electricity from solar, wind or other renewable resources by 2020.
"By changing the credit to $1.50 per watt from $2.50 a watt, we are effectively going back to our goal of covering only 50 percent of the cost," he said. "We will take those dollars and reallocate to other renewable energy projects like wind or bigger solar . . . We are not making any money. We are being reasonable stewards of money."
The current gloom and doom aside, Scott is upbeat about 2009.
For one, he has 75 preorders in the books. Hopefully, many of them will materialize in the first quarter, he said. Also, commercial projects have begun to pick up, helping SolSource keep its 25 employees on board and not resort to layoffs.
In Colorado, there's ample interest in utility projects.
Last month, when it put out 25 megawatts of projects for bid, Xcel received bids amounting to 400 megawatts from 18 solar developers – 16 times as much as it asked for – according to recent filings with the Public Utilities Commission.
Xcel's plan to seek up to 600 megawatts of solar projects with energy storage capabilities in early 2009 likely will receive a similar response from investors, given the number of companies that have indicated an interest in working with the utility.
One megawatt of solar power serves the average electricity needs of 250 to 350 households.
Experts say the renewable energy industry is in an enviable position.
"The regulatory environment has never been more favorable," wrote Gianreto Gamboni and Christoph Hugi, analysts with UBS, the Swiss banking giant with business around the world.
"There are currently no signs that government support will fall off," they added. "On the contrary, there are positive signs, for example, from the U.S."
Congress recently extended federal tax credits for solar installations as part of the economic bailout. Also, the cost of solar panels has been falling, making them more competitive with other energy sources.
In Colorado, a silver lining to these dark economic times could be an industry shakeout, Welch said.
Today, more than 100 solar companies operate in the Front Range, many with fewer than five employees. Too many players crowding the industry not only have squeezed profit margins, but in some cases have created doubts about the quality of work.
"Only about 20 companies really know what they are doing," Scott said. "Some Jack gets a truck and he uses it for installing solar. I am scared for the industry."
Solar installers are encouraged to receive certification, although smaller companies may not have certified personnel on board.
"The strong companies will survive in this environment," he said. "There's still a lot of business to be had."
Colorado's solar industry at a glance
* Solar energy production: No. 4 in the nation with 24 megawatts of rooftop photovoltaics and 8 megawatts of utility-scale systems
* Number of companies: Approximately 200
* Investment: $150 million in 2008
* Employment: 750 permanent and 200 construction jobs in 2008
* Sales growth: More than 50 percent annually through October 2008
